CHAPTER 1 GLOBALIZATION AND INTERNATIONAL BUSINESS Textbook: J.D. Daniels, L.H. Radebaugh & D.P. Sullivan, (2007) International Business: Environment and Operations 11th edition, Prentice Hall, NJ.
• • • • To define globalization and international business and how they affect each other To understand why companies engage in international business and why international business growth has accelerated To comprehend criticisms of globalization To become familiar with different modes a company can use to accomplish its global objectives WHY ARE GLOBALIZATION AND INTERNATIONAL BUSINESS IMPORTANT? As people and organisations have expanded their access to raw material, resources, ...view middle of the document...
the principal source of capital in almost all nations is still domestic. Following are seven interrelated factors that have contributed to the spiraling growth in globalization. A. Increase in and Expansion of Technology Vast improvements in transportation and communications technology—including the development of the Internet—have significantly increased the effectiveness and efficiency of international business operations.
B. Liberalization (less strict regulations) of Cross-Border Trade and Resource Movements Over time most governments have lowered restrictions on trade and foreign investment in response to the expressed desires of their citizens and producers. In addition, the General Agreement on Tariffs and Trade, the development of economic blocs such as the European Union, and other such facilitating mechanisms have provided increased access to many foreign markets. C. Development of Services That Support International Business Services provided by the Internet, government, banks, transportation companies, and other businesses greatly facilitate the conduct and reduce the risks of doing business internationally. D. Growing Consumer Pressures Because of innovations in transportation and communications technology, consumers are well-informed about and often able to access foreign products. Thus competitors the world over have been forced to respond to consumers’ demand for increasingly higher quality, more cost-competitive offerings. E. Increased Global Competition The pressures of increased foreign competition often persuade firms to expand internationally in order to gain access to foreign opportunities and to improve their overall operational flexibility and competitiveness. F. Changing Political Situations The transformation of the political and economic policies of the former Soviet Union and the People’s Republic of China has led to vast increases in trade between those countries and the rest of the world. In addition, the improvements in national infrastructure and the provision of trade-related services by governments the world over have further led to substantial increases in foreign trade and investment levels. G. Expanded Cross-National Cooperation Governments have increasingly entered into cross-national treaties and agreements in order to gain reciprocal advantages for their own firms, to attack problems jointly that one country cannot solve alone, and to deal with areas of concern that lie outside the territory of all countries. Often, such cooperation occurs within the framework of international organizations such as the United Nations, the International Monetary Fund, the World Trade 3|Page
Organization, and the International Bank Reconstruction and Development (World Bank).
III. CRITICISMS OF GLOBALIZATION Antiglobalization forces have protested both peacefully and violently as they press for legislation and other means to stop or slow the globalization process. Issues of threats to national...